Benchmarks trade with modest gains; Nifty holds 9,850 mark

Indian equity benchmarks continued their trade in green with modest gains in the morning session on account of buying in frontline blue chip counters. The rupee opened higher against dollar on account of selling of American currency by banks and exporters. Foreign Portfolio Investors sold shares worth Rs 727.63 crore on Wednesday with gross purchases and gross sales of Rs 3,474.55 crore and Rs 4,202.18 crore, respectively. Traders got some support after a private research enlightened that the implementation of the new Insolvency and Bankruptcy Code is expected to give a big push to credit growth as international experience shows that laws to resolves bad assets have helped boost credit growth. The upsides was however capped after the RBI data showed that India Inc’s overseas direct investment fell over 47 percent to $1.77 billion during July 2017. Indian companies had invested $3.35 billion in the same month of last year. Of the total investments in foreign ventures by Indian companies overseas, $900.66 million was in the form of issuance of guarantee, $513.81 million as loan and $353.55 million was part of equity investment. Metal majors are likely to remain in focus as zinc and aluminium prices have jumped to their highest levels in over 10 years. Copper is also hovering around its 3-year high. Shares of liquor companies like United Spirits, United Breweries, Radico Khaitan, Pincon Spirit, Globus Spirits, Empee Distilleries, Som Distilleries & Breweries, GM Breweries, Tilaknagar Industries, Associated Alcohols & Breweries, Pioneer Distilleries, Ravi Kumar Distilleries and Khoday India were trading in green with report suggesting that the Supreme Court on Wednesday clarified that the liquor ban on highways does not extend to municipal areas.

Traders were seen piling up position in Healthcare, IT and Utilities stocks, while selling was witnessed in Realty, Bankex and Telecom sector stocks. In scrip specific development, Infosys extended its firm trade from the previous session after the clamour to bring one of its co-founder Nandan Nilekani back to the company grew louder with the firm’s former CFO V Balakrishnan and a group of 12 major institutional investors seeking his return for the clean-up. United Bank of India was trading in green on raising Rs 500 crore on private placement basis.

On the global front, Asian markets were trading mostly in red, ahead of a meeting of central bankers in the US state of Wyoming that could provide fresh cues on interest rates and unwinding stimulus plans. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 31,500 and 9,850 levels respectively. The market breadth on BSE was positive in the ratio of 1185:879, while 112 scrips remained unchanged.

The BSE Sensex is currently trading at 31583.40, up by 15.39 points or 0.05% after trading in a range of 31546.05 and 31678.19. There were 15 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.27%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.05%, IT up by 0.94%, Utilities up by 0.72%, TECK up by 0.69% and Power up by 0.68%, while Realty down by 0.32%, Bankex down by 0.05% and Telecom down by 0.05% were the only losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.93%, Lupin up by 1.84%, Sun Pharma up by 1.66%, Tata Motors up by 1.07% and Power Grid up by 0.98%.

On the flip side, Adani Ports & Special Economic Zone down by 1.27%, Maruti Suzuki down by 0.84%, Bajaj Auto down by 0.74%, HDFC down by 0.67% and Asian Paints down by 0.64% were the top losers.

Meanwhile, Insolvency & Bankruptcy Board of India (IBBI) chairperson MS Sahoo has said that resolution of indebtedness of a firm will be the top priority of all constituents of the insolvency and bankruptcy mechanism in the interest of the stakeholders, and it will think about liquidation only if it finds that the resolution is hard to come by.

Sahoo said that “In such a process, the first endeavour is resolution. If it is not resoluble then they think about liquidation. The endeavour of the law, insolvency professionals and committee of creditors is to first find out a resolution plan.” The code seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.

The IBBI chief said as per the Insolvency and Bankruptcy Code (IBC), resolution is left with the imagination of the market participants and they are free to take any call in regards to an entity, which is down with indebtedness. The government is just trying to create an enabling environment. Sahoo also pitched for a market driven institutional mechanism to facilitate and enable mergers and acquisitions with minimum regulations that can conveniently safeguard the legitimate interests of concerned stakeholders.

Under the insolvency and bankruptcy law, employees, creditors and shareholders have powers to initiate winding up process at the first sign of financial stress such as serious default in repayment of bank loan. Sahoo said that “Why can’t we have that kind of framework where approvals of the authorities are minimised, institutions work and everything is delivered by the market?”

The CNX Nifty is currently trading at 9857.75, up by 5.25 points or 0.05% after trading in a range of 9848.85 and 9881.50. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Infosys up by 2.30%, Tata Power up by 1.78%, Lupin up by 1.76%, Tech Mahindra up by 1.75% and Sun Pharma up by 1.63%.

On the flip side, Adani Ports & Special Economic Zone down by 1.12%, Indiabulls Housing down by 1.10%, Maruti Suzuki down by 0.86%, Ambuja Cement down by 0.85% and HDFC down by 0.79% were the top losers.

The Asian markets were trading mostly in red; Nikkei 225 decreased 56.79 points or 0.29% to 19,377.85, Jakarta Composite decreased 22.88 points or 0.39% to 5,891.14, Shanghai Composite decreased 4.84 points or 0.15% to 3,282.87 and FTSE Bursa Malaysia KLCI decreased 0.09 points or 0.01% to 1,772.85.

On the other hand, KOSPI Index increased 9.06 points or 0.38% to 2,375.46, Taiwan Weighted increased 70.27 points or 0.68% to 10,477.08 and Hang Seng increased 166.7 points or 0.61% to 27,568.37.